Assessing the social benefits from a small-scale biomass stove program

Report 2010/21

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 from Vista Analysis 	AS
 	
 
Assessing the social benefits from a small
biomass stove program
A case study from Guizhou Province
Han Xianyu 
Vista Analys	
is	
 	
Assessing the social benefits from a small
biomass stove program	 	
A case study from Guizhou Province	 	
is 3 December 2010 	
 	
 	
Assessing the social benefits from a small	-scale

II 
 	
Document Details 
Vista Analysis AS Report number 2010/21 
Title Assessing the social benefits from a small-s cale 
biomass stove program. A case study from 
Guizhou Province 
ISBN 	
978-82-8126-010-8	 	 
Author Han Xianyu 
Finished date 3 December, 2010 
Project Manager Haakon Vennemo 
Quality Control NA 
Client Norwegian Research Council 
Access Public 
Published PDF 	
www.vista-analyse.no	 
Key words Cost benefit analysis, household stoves, China

III 
 	
PROJECT MANAGER’S PREFACE 
This report is the Master Thesis in economics of Ha n Xianyu, which was approved 
September 22, 2010. Han Xianyu wrote the thesis whi le being a Research Assistant at 
Vista Analysis. It is a contribution to the project Indoor air pollution – A neglected poverty 
related cause of globall ill health – implications fo r public health and society of promoting 
clean household fuels in China , which is implemented by CICERO and Vista Analysis on 
behalf of the Norwegian Research Council. 
3 December 2010 
 
Haakon Vennemo 
Project Manager Vista Analysis AS

IV 
 	
Content 
PROJECT MANAGER’S PREFACE ......................... .................................................................................... III	 	
AUTHOR’S PREFACE .................................. .................................................................................................. VI	 	
ABSTRACT .......................................... ............................................................................................................ VII	 	
LIST OF TABLES .................................... ......................................................................................................... IX	 	
LIST OF FIGURES ................................... .......................................................................................................... X	 	
1 Introduction .................................... ............................................................................................................... 0	 	
2 Background ...................................... .............................................................................................................. 6	 	
2.1 The overview of the biomass energy utilization in china .................................................... 6	 	
2.2 Previous undertaken biomass stove programs .... ................................................................... 7	 	
2.2.1 Sino-Dutch Program........................... ........................................................................................ 8	 	
2.2.2 Biomass stove dissemination project in wester n China .............................................. 9	 	
2.3 Scio-economic condition in Guizhou Province ... ...................................................................... 9	 	
3 Literature Review ............................... ...................................................................................................... 13	 	
3.1 Concentration of pollutants ................... ....................................................................................... 13	 	
3.2 Epidemiology Studies .......................... ........................................................................................... 14	 	
4 Methodology ..................................... .......................................................................................................... 16	 	
4.1 The calculation of benefits, B ................ ....................................................................................... 17	 	
4.1.1 Conceptual Model ............................ ........................................................................................ 17	 	
4.1.2 Practical Computing Model- Pollutant-based me thod .............................................. 19	 	
4.2 The calculation of costs, C ................... .......................................................................................... 21	 	
4.3 Comparison with present value of benefits and c osts ....................................................... 21	 	
5 Simulation analysis ............................. ..................................................................................................... 23	 	
5.1 Calibration ................................... ........................................................................................................ 23	 	
5.2 The epidemiology data ......................... .......................................................................................... 27	 	
5.3 Health improvement and Net benefits ........... .......................................................................... 29	 	
5.4 Sensitivity test .............................. ..................................................................................................... 31

V 
 	
6 Conclusions ..................................... ............................................................................................................ 34	 	
6.1 Remarkable conclusions ........................ ........................................................................................ 34	 	
6.2 Discussions ................................... ...................................................................................................... 35	 	
References ........................................ ............................................................................................................... 36

VI 
 	
AUTHOR’S PREFACE 
First of all, I would like to express my sincerest gratitude to my supervisor, Dr. Haakon 
Vennemo, I am extremely grateful for his guidance i n my studies and the great offer for 
me to participate in the project ‘Indoor air pollut ion. A neglected poverty related cause 
of global ill health’. I must make grateful acknowl edgement to the financial support from 
Vista Analyse for this thesis. I would like to than k Haakon Vennemo, for his patient help, 
simulating suggestions and insightful comments that guide me throughout the writing of 
the thesis. Without his invaluable help in all resp ects, this thesis would never have been 
completed. 
I am indebted to Kristin Aunan and Heidi Elizabeth Staff Mestl in CICERO, for helping me 
a lot with data collecting and the model settings. I am grateful to them for providing me 
with intensive knowledge and insightful comments. 
I would like to thank Director Ingeborg Rasmussen, Steinar Strøm, Karin Ibenholt, John 
Magne Skjelvik and all other personnel and fellow s tudents in Vista Analyse for 
providing such a friendly and inspiring researching environment. 
I would also like to thank everyone in the Departme nt of Economics in University of 
Oslo, both teaching staff and students, for offerin g me opportunities to have a most 
enjoyable and memorable study experience here. Espe cially I am deeply grateful to 
Professor Olav Bjerkholt, for giving me the opportu nity to be a student of this program 
and the invaluable help throughout my studies. 
Last but not the least, I want to thank my entire f amily and friends both in China and 
Norway for their unconditional help and encourageme nt. In particular, I want to express 
my sincere grateful to my parents and my husband Ch unlin Shi, who are always back me 
up and cherish me. All remaining mistakes are mine . 
Xianyu Han 
Aug. 2010 Oslo

VII 
 	
ABSTRACT 
This thesis uses a cost-benefit analysis to compare the benefits and costs generated from 
the implementation of new biomass project in rural of Guizhou. The benefited 
population is mainly the user of traditional and ol d improved stoves. Base on the 
epidemiologic studies, the results of the simulatio n demonstrated that for these two 
types of users, there is significant reduction of t he excess mortality risk from 
Cardiopulmonary Diseases (CPD). This health improve ment is even larger for the 
traditional stove users. From the results of the co st-benefit analysis, there are positive 
net benefits for both cases which mean the stove pr oject is advisable. Consistent with 
the health improvement, users of the traditional st oves will be benefited more from this 
intervention compared with the households using old improved stoves. These results 
support the approval of the stove project for mitig ating the indoor air pollution. 
The results of the sensitivity test also demonstrat e that the emphasis should be put on 
the standardization of the stove production and set ting up the criteria of new biomass 
stove. Since the implementation of the intervention will be more beneficial with the 
efficient and suitable biomass stoves.

VIII 
 	
LIST OF ABBREVIATIONS 
ALRI – Acute Lower Respiratory Infections 
CAREI – China Association of Rural Energy Industry 
CB – Chronic Bronchitis 
CEIHD – Center for Entrepreneurship in Internationa l Health and Development 
CICERO – Center for International Climate and Envir onmental Research – Oslo 
COPD – Chronic Obstructive Pulmonary Diseases 
CPD – Cardiopulmonary Diseases 
CVD – Cardiovascular Diseases 
DD – Daily Dose 
LPG – Liquefied Petroleum Gas 
NBS – National Bureau of Statistics of China 
RD – Respiratory Disease 
R&D – Research and Development 
TCE – Ton of Standard Coal Equivalent 
USEPA – U.S. Environment Protection Agency 
VSL – Value of Statistical Life 
WTP – Willingness to pay

IX 
 	
LIST OF TABLES 
Table 2.1 Strategic goals of rural biomass energy d evelopment 
Table 2.2 Standard criteria for high-efficiency and low-emission stoves 
Table 5.1 Parameters calibration 
Table 5.2 Pricelist of biomass stoves 
Table 5.3 Summary of the publications used for esti mating VSL in China 
Table 5.4 Summary of statistical results 
Table 5.5 The setup of parameters for likely impact estimation 
Table 5.6 Sensitivity of estimation results to seve ral parameters (The second case as the 
baseline level)

X 
 	
LIST OF FIGURES 
Figure 1.1 Disposable income per person and proport ion of rural population for 
provinces 
Figure 2.1 Percentage of total soil erosion areas i n Guizhou province 
Figure2.2 Firewood saving stove and biogas digester projects implemented in rural 
Guizhou 
Figure 5.1 Impact pathways analysis 
Figure 5.2 Net benefits for household using traditi onal stove after intervention 
Figure 5.3 Net benefits for household using old imp roved stove after intervention 
Figure 5.4 Estimation of net benefits under uncerta inty

1 Introduction 
Macro-economists usually treat health and life expectancy as major proxies for 
qualifying national economic development. After 30 years economy opening, China has 
already gotten abundant achievements in economy gro wth and the living quality 
improvement along with the imbalanced developments across the country. The 
urbanization process has been carried out for more than 20 years and still continuing, 
the rural population still shares more than half of the total population, which is about 
54.3% in 2008 (NBS, 2009), this fraction is even hi gher in the western provinces. Figure 
1.1 exhibits the proportion of rural population and income level per person for each 
province. 
It is reported that more than 90% of the households have access to the clean energy 
such as electricity or liquefied petroleum gas (LPG ) among this category of population, 
but the problem still exists. Since in some remote areas, the electricity is only enough for 
lighting, but the energy for cooking or heating can not be met by electricity; most of the 
residents still follow the tradition from generatio ns using poorly ventilated stoves and 
rely on the biomass and coal (combined called solid fuel) as the main resource for 
cooking and heating ((Rural Survey Organization) NB S, 2008). 
Both global and Chinese studies in terms of the hea lth burden demonstrate that indoor 
air pollution has been an important factor affectin g the health of people living in the 
rural and remote areas of developing countries. The annual report from WHO using fuel-
based method shows that approximately 0.42 million premature deaths per year 
occurred in China are related to the use of solid f uels (J. J. Zhang and K. R. Smith, 2007). 
However this result has been suspected to be consid erably conservative by some other 
researchers. It is possible to obtain a more detai led assessment of exposure according 
to different groups of population and types of fuel use based on an alternative method, 
named pollutant-based method, instead of fuel-based approach. The estimated 
premature deaths using pollutant-based method may r each to 8 times more than WHO 
estimation, with a lower bound of 0.82 million. It also indicates that through the 
practical interventions, the huge health improvemen t can be achieved (H. E. S. Mestl et 
al., 2007).

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The government started to conduct national improved stove program in 1980s in the 
rural area of several provinces. This stove plan is aimed at improving the efficiency of 
traditional stoves for the residents in the rural a rea. A precise valuation of this stove 
program including the type of fuel used and the per formance of the improved stoves has 
been published; it also provides the measurement of the exposure for each category of 
stoves (Smith K. Sinton J., Peabody J, Liu YP et.al. , 2004). From the reviewing of the 
papers published between 1994 and 2006 regarding of the indoor air pollution 
intervention, the epidemiological studies have prov ided the evidences for the benefits 
from the improved stove and combined educational an d behavioral interventions, 
mainly concerning the coal stove, but only few of t he biomass stove (Zhang J.L Liu L., 
Jiang F.X., 2007). 
The objective of this thesis is to evaluate the ben efits of a better ambient or indoor air 
quality, thus the relevant linkages between polluta nt emissions and the significant 
health damage must be determined first, and then th rough quantifying these effects, the 
benefits can be monetarily valued. Epidemiological evidences clearly indicate that the 
solid fuel combustion is associated with higher inc idence for certain diseases in the 
population exposed, such as lung cancer, obstructiv e pulmonary disease etc., which can 
be defined as a potential effect matrix (William H. Desvousges et al., 1998). Based on the 
epidemiology evidences, WHO has also done plenty of works to determine and estimate 
the health burden relating to the indoor air pollut ion, the main method involved in 
addressing the potential damage caused by combustio n of the solid fuel is the fuel-based 
approach (M Desai et al., 2004) . 
When it comes to practical part, there still exist difficulties even though the risk factors 
have been determined, since the uncertainty involve d in the data collection, complex 
emission composition and living ambient of the popu lation may not be fully captured or 
explained by the model. By disaggregating the assoc iated effects, I hope to derive a 
precise image of the benefits from the air quality improvement, such as the relative risk 
reduction of acute lower respiratory infections (AL RI) in the group of children less than 
5 years old.

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The benefits can be scaled up if the stove program would be promoted among a large 
scale of population, for instance, the rural area o f Guizhou province.	
 	
Different from the south-east coastal provinces, th e population of Guizhou province has 
the similar proportion as the other provinces in we stern China: more than half of the 
whole population dispersed in the rural area, the G DP per capita is ranked last among all 
provinces. The special geological condition and in complete infrastructure are seemed to 
be the main reasons to hinder the economic growth i n these remote areas in Guizhou. 
Most residents in remote rural areas, including eth nic minority people, are still relying 
on the traditional open stoves for cooking, room he ating or drying chili and corns. The 
use of open stoves, solid fuel with high content of sulfur, arsenic and fluoride, low 
thermal efficiency and incomplete combustion of the stove have been causing great 
Figure 1.1 this figure illustrates the disposable income per person in each household and 
the proportion of the rural population for correspo nding province. It is ranked according 
to the share of rural population. Guizhou and the o ther provinces in western China have 
larger share of rural population and lower disposab le income per person compared with 
the southeast coastal provinces such as Zhejiang, J iangsu, Fujian and Shandong. Source of 
data: 	(NBS, 2009	)

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damage to the people especially the women and children who spend longer time in the 
kitchen (He G.Y. An D., et al, 1995). Meanwhile, in the southeast coastal areas, clean 
energy, including electricity and LPG, has already dominated the household cooking and 
heating energy consumption market. In order to miti gate the IAP in rural area in China, 
switching from traditional heavily polluting stove to the new environment-friendly 
stove is an alternative way. In this thesis, I want to estimate if it is beneficial to 
implement this stove project from the perspective o f health improvement. 
Recently, the rapid growing stove manufacturers pro vide more available choices for the 
indoor air pollution interventions. The main reason might be the legislation of the 
Renewable Energy Law (2005) and the vigorous promot ion of the newly improved 
biomass stove by the government. Compared with the traditional stoves, the new 
biomass stove is more energy-efficient and environ mental-friendly (B. Zhou, 2009). If 
the government carries out the biomass stove projec ts and help the local residents to 
install new biomass stoves, will the health benefit s totally cover the cost of the stove, 
that is, will this project be beneficial from the p erspective of health improvement? 
Some cost-effective analysis has already been done for the national improved stove 
program conducted in 1980s. It is reported that nat ional stove program is the most 
cost–effective measure from the aspect of the rural energy conservation (Y. Lu, 1993). 
Some researchers place emphasis on the ‘technology- behavior interventions’, which 
indicating that the effects can be achieved from th e better designed technological 
intervention (Y. Jin et al., 2006). Also many papers are concerned about the health 
improvement from the reduction of pollutant emissio n (R. D. Edwards et al., 2007, G. He 
et al., 2005, H. E. Mestl et al., 2007). 
The purpose of this thesis is to focus on net benef it generated from the potential health 
improvement that can be obtained from the new bioma ss stove project. A cost-benefit 
analysis will be conducted to compare the total pot ential benefits with the costs. The 
results of this analysis will give some answers to the importance of the switch from the 
old stove to the new stove and whether there has en ough incentives for the 
implementation of the stove program in Guizhou. 
To investigate the net outcome from implementing a new biomass stove project in 
Guizhou province, I set up a cost-benefit analysis to compare the cost and benefit

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generate within a household unit. The quantification of health improvement follows the 
impact pathway method: two scenarios are suggested for evaluating the health 
improvement after the intervention, which are divid ed according to different types of 
stoves used. The first scenario represents the hous ehold living in the heaviest polluted 
indoor air quality with using of the traditional st oves. The second scenario refers to the 
moderate level of indoor air pollution while the ol d improved stove is the main choice 
for the household in this category. In order to eva luate the damage from the indoor air 
pollution for these two scenarios, the significant risk factors are determined first, and 
then based on the epidemiology studies, we can quan tify the possible health 
improvement for the corresponding improved air qual ity and finally this quantified 
improvement can be monetized. 
The main results of the thesis are as follows: with respect to the two scenarios 
mentioned before, if the indoor air quality can be significantly improved after the 
intervention, the monetized health improvement will cover the cost of the 
implementation of the new stove project. The health improvement is mainly from the 
reduction of mortality risk from cardio-pulmonary d iseases. The results of simulation 
show that the households using traditional stove wi ll obtain the health improvement 
almost twice as much as the households using old im proved stove. With respect to the 
results of the cost-benefit analysis, both scenario s end with the positive net benefits, 
although the second scenario has lower health impro vement. Therefore, it supports the 
approval of the new stove project aiming at tacklin g the damage from the combustion of 
biomass fuel. However, the result from the sensitiv ity test indicates that the net benefits 
can also come down to negative value with more unce rtainties involved in the 
simulation. With analyzing the parameters separatel y, I derive the exact threshold level 
for each parameter that leads to the negative net b enefits. These can be supplement 
guidelines for the selection of the new biomass sto ves with respect to costs, 
concentration level and life expectancy. 
The method used in this thesis is mainly a combinat ion of epidemiology studies and 
cost-benefit analysis. The data source of concentra tion level and epidemiology-related 
data is based on a project conducted by Center for International Climate and

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Environmental Research-Oslo (CICERO)	1. Numerical analysis and Monte Carlo 
simulation are performed in Excel. 
The reminder of the thesis is as follows. The first chapter is the part of introduction: 
illustrate the main purpose of the thesis. The seco nd chapter aims to provide the 
background of the routine of energy consumption tra nsition in rural China and the soc-
economic situation in Guizhou province. The third c hapter reviews the research 
achievement from both china and abroad and the exte nsion work need to be done. The 
fourth part of the paper explains the model and the methodology to evaluate the 
improvement of the health and compare the benefits with the cost. Chapter 5 illustrates 
the results of the model, the determination of valu ation of statistical life and a sensitivity 
test of the results will be presented. The last cha pter is conclusion and the 
recommendations for the future work. 
 
 	
 	
 	 	
1 The ongoing project ‘Indoor air pollution in China - NEGLECT (GLOBVAC)’ is conducted by CICERO, the 
updated data for mortality risk and pollutants conc entrations are both kindly provided by Kristin Auna n and 
Heidi Elizabeth Staff Mestl. See the homepage for t he project: 
http://www.cicero.uio.no/projects/detail.aspx?id=30 238&lang=en

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2 Background 
2.1 The overview of the biomass energy utilization in china 
From the view of the financial support activities, the government is the biggest 
supporter for the use of renewable energy. In order to alleviate the conflicts resulted in 
energy shortages in rural areas; the government has put lot of effort to promote 
renewable energy development and utilization. Accor ding to the report of 2000-2015 
New Energy and Renewable Energy Development Plan	
2, the available rural energy 
capacity is presented as follows: first of all, bio mass resource in rural China is abundant, 
annual yield of straw is about 700 million tons, wh ile more than 280-350 million tons of 
total yield can be used as direct source of rural e nergy. Secondly, reasonable amount of 
firewood harvesting is assumed around 158 million t ons while the current actual 
amount of harvesting is estimated over 182 million tons, which is at least 15% more 
than the recommended level. Therefore, it means tha t certain proportion of available 
biomass energy has been wasted or not fully develop ed in rural China. Furthermore, if 
this firewood over-harvesting continues, it may lea d to serious consequences such as 
land deterioration or soil erosion. 
The part of this new development plan for 2015 also focuses on air quality 
improvement: the amount of new energy and renewable energy consumption 
substituted for fossil fuel will be equivalent to 4 3 million tons of standard coal 
equivalent (TCE)	
3, which equals to annual saving of 60 million tons of coal; 30 million 
tons of carbon emissions reduction; 2.1 million ton s total emission reduction of SO2, 
NO	
X and Particle Matters (PM). The realization of the whole plan requires a total 
investment of about 89 billion Yuan with annual inve stment of more than 5 billion. 
 
 	
 	
2 2000-2015 New Energy and Renewable Energy Developme nt Plan elements (2000 version 4) is 
published by Resource Conservation and Comprehensiv e Utilization of State Economic and Trade 
Division. Webpage: 	
http://www.envir.gov.cn/info/2000/9/921307.htm	 (In Chinese)	 	
3 Tonne of Standard Coal Equivalent (TCE) is a stati stical term used for uniform energy criterion in China, 
one ton of high-quality coal generating a standard calorific value of 7000Mcal is defined as tce. 1 ton of 
raw coal generates only 5000 Mcal. 1 ton of coal eq uivalent (tce) = 29.3 GJ (net calorific value) = 7000 
Mcal

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Table2.1 Strategic Goals of Rural Biomass Energy Development 
Priority Area for Development Technologies 2010 2015 2020 
Priority 1: Household 
heating 
and cooking Household biogas digesters 
(million) 
40 60 80 	Straw biogas plants 100 500 1000 
Straw briquette/pellet fuel 
(million tons) 
1 20 50 
Medium-to-large biogas 
plants 4000 
not 
available 1000
0 	
Priority 2: 
Bioethanol/biodiesel Energy crop planting area 
(million ha) 
1.66 not 
available 3.33 
Priority 3: Biomass-powered	 	
electricity Straw power 
generation(GW) 
3 not 
available 6 
GW = Gigawatt, ha = hectare. Source of data: Modi
fied from (Q. Zhang et al., 2010) based on MOA’s 2015 
goals and the central government’s long-term develo pment plan for renewable energy for 2020	
4. 	
Asian Development Bank recently published report in dicates that: in the next 10 years 
China will need 413.5 billion Yuan to carry out the overall renewable energy projects, of 
which 314.3 billion Yuan will be allocated as benef its to farmers, 16.5 million for 
construction of community or central gas station pr ojects, 82.7 billion will be used for 
biomass power generation and liquid fuel production , in addition, 1.5 billion will be 
allocated as funds for research and development (R& D), demonstration and pilot. 
Recently, most of the ongoing biomass projects are implemented in small scale. This is 
mainly because most of China's new energy and renew able technology development is 
far behind foreign countries, while investments mos tly either rely on state investment, 
or other limiting financing channels (Q. Zhang, M. Watanabe, T. Lin and et.al., 2010). 
2.2 Previous undertaken biomass stove programs 
In 1990s China began to implement the policy of red ucing the use of wood fuel in order 
to protect the local forest resources, but some stu dies also indicate that after the 
implementation of these policies, the demand for co al and other fossil fuel has increased 
substantially, particularly in the coal-rich areas. Since the residents have limited energy 
choices for cooking and heating, the switch to the unwashed coal and the use of 
 	
 	
4 Long-term development plan for renewable energy is released by National Development and Reform 
Commission (NDRC) in 2007. 
Download: 	
http://www.sdpc.gov.cn/zcfb/zcfbtz/2007tongzhi/W020 070904607346044110.pdf	(in 
Chinese)

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inefficient traditional stoves will lead to potential health risks for local residents. (Q. 
Xiang, 2006). 
Since the Renewable Energy Law released in 2005 off icially supports the use of biomass 
energy, the number of biomass stove manufacturers h as a remarkable growth year by 
year; even the traditional coal stove business ente rprises emerge gradually as 
developing a variety of emission-reduction and high -efficiency biomass stoves. This 
emerging stove market provides the biases of the pr omotion of the new biomass stoves. 
2.2.1 Sino-Dutch Program 
The project is financial supported by the Shell Fou ndation, approved by relevant 
departments of the Ministry of Agriculture and comp leted accompanied by China 
Association of Rural Energy Industry (CAREI) togeth er with Center for 
Entrepreneurship in International Health and Develo pment (CEIHD). The aim of the 
project is to select leading Chinese and internatio nal high-efficiency and low-emission 
household biomass stoves and promote technological innovation projects. The project 
was divided into three steps, which lasted nearly t wo years, began from June 2005, 
ended in March 2007 (F. Hao, 2007a). 
During the beginning of the project, experts from C AREI and CEIHD jointly constituted 
testing standards on China's biomass stoves perform ance (Table 2.1). The significant 
difference to tell the new biomass stove from the t raditional wood stove is the high 
thermal efficiency, which can be 15%-20% higher com pared with the old stoves (F. Hao, 
2007b). The stove with the best performance in the test won the competition. 
Table2.1 the standard criteria for high-efficiency and low-emission stoves 
Thermal efficiency	 	≥35%	 	
Smoke and dust emission concentration 	 	≤ 70mg/m	3 	
Indoor CO average concentration 	 	≤10mg/m	3

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Ringelmann Smoke 	5 	≤ level 1	 	
Source (F. Hao, 2007b) 
2.2.2 Biomass stove dissemination project in western China 	 	
This project is funded by U.S. Environment Protection Agency (USEPA) and 
implemented by both China’s Rural Energy Industry A ssociation (CAREI) and the U.S. 
Center for International Health and Development Ent repreneurs (CEIHD), it started 
from Oct.1.2007, ended until Sep 30, 2009. 
The aim of the project is to reduce indoor air poll ution and improves human health, 
especially women and children’s health. At the same time, the project will vigorously 
promote the winning stove of the sino-dutch competi tion in rural western China. 
Therefore the project will help the market-oriented stove enterprises develop more 
rapidly. The biomass stoves are disseminated mainly in Chongqing, Yunnan, Guangxi, 
Shanxi and Tibetan areas in Sichuan (Aba). 
The important message we can tell from the winning stoves is that the stove companies 
have been paying more attention to practicality and meeting local residents’ living 
habits, such as one stove is specially designed for the people live in Tibetan area, since it 
can use many different combination of fuels such as dung and firewood. In addition to 
cooking, the stove can be used as a heater in the w inter, which is very important for the 
people live in that severe weather condition. Also for each stove, there are often two or 
three cookers to adapt to Tibetan’s cooking habit-- -cooking several pots at the same 
time. It makes cooking more convenient than the old ones. 
2.3 Scio-economic condition in Guizhou Province 
We are witnessing the severe imbalance development of economy in China from the 
recent twenty years especially the income inequalit y in terms of rural and urban areas. 
The main income resources of central and western pr ovinces rely on agriculture, or 
locally available minerals and forestry resources. Urbanization of the southeast coastal 
provinces has transferred the problems of environme ntal pollution, ecological 
degradation, water pollution, air pollution and oth er problems to nationwide, 
 	
 	
5 Ringelmann Smoke Chart: use the shades of gray to c ompare the different density of smoke rising from 
the stack. See: http://www.cdc.gov/niosh/mining/pub s/pdfs/ic8333.pdf

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meanwhile the western provinces still experience the consequences of less developed 
economy, such as the indoor air pollution from biom ass fuel in rural Guizhou. 
Guizhou is located in the mountainous region in sou thwest China while the eco-zones 
are mainly located in the transition terrain, but t here are still some ethnic minorities 
living in mountainous areas, such as Miao. It is re ported that in Guizhou province rural 
population accounts for 70% of the province's popul ation; in 2007 the per capita GDP is 
only over one-third of the national level along wit h the extremely frail ecological 
environmental conditions (NBS, 2008, Q. Xiang, 2006 ). As presented in Figure2.1, the 
total areas of soil erosion in Guizhou province hav e a significant growth from last 1950s. 
Until 1990s, the trend of growth was brought under control. From the report published 
by Guizhou government; it will take at least 70 yea rs to tackle this severe problem (D. 
Zhang et al., 2001). 
 
Source of data: (D. Zhang, Z. Ouyang and S. Wang, 2 001) 
Figure2.2 exhibits the development of rural energy in Guizhou. Compared with the 
promotion of firewood and coal saving stove, the an nual promotion of biogas container 
is growing steadily. The peak of the stove promotio n in 2004 is mainly related to the 
World Bank stove project in Guizhou to tackle the i ndoor air pollution with fluorosis and 
arsenic poisoning. In Guizhou province, the local g overnment also has been promoting 
the biogas program in the villages as both an impor tant environmental policy to mitigate 
the indoor air pollution and energy saving project. Biogas promotion project is greatly 	
0,00 %
10,00 %
20,00 %
30,00 %
40,00 %
50,00 %
1950s 1960s 1980s 1990s 2000s	
Percentage	
Figure 2.1 Percentage of soil erosion areas in Guizhou Province

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supported by the central and local government. Combined with implementing the biogas 
container, the 
 
Source of data: (NBS, 2005, 2008) 
local government also assisted the residents to rec onstruct the toilets which give extra 
by-products of indoor air quality improvement. 
Electricity transmission from West to East China pr oject	
6 in Guizhou also leads to 
closing-down of the some small coal mines. In order to eliminate inefficient production 
capacity, large number of small coal mines were shu t down, which has sent coal prices 
soaring since these small coal mines used to cover the household energy demand. 
Farmers turn to choose traditional firewood. Howeve r, the implementation of conceding 
the land to forestry may also cause the limited sup ply of firewood fuel for farmers. The 
old-fashioned firewood stove are often used as heat ing stove in rural area with the 
shortcomings as large demand for the consumption of firewood along with low thermal 
efficiency, meanwhile it will cause heavily air pol lution. The estimations indicates that 
from switching to the firewood and coal saving stov es, each household can save more 
than 1000 KG of firewood annually and protect 0.03h m	
2 area of forest (Q. Xiang, 2006). 
 	
 	
6 Electricity transmission from West to East China pr oject launched from 2003, the aim of the project is to 
ease the energy shortage in the coastal southeast p rovince, by building the power station in western 
province where the coal mine is abundant	
. 	
0
5
10
15
20
25
30
35
40
45	
2003	2004	2005	2006	2007	
Annual Promotion
(10 thousand)	
Figure 2.2 The firewood saving stove and 
biogass digester projects implemented in rural Guizhou	
Firewood and coal saving 
stoves
Biogas digesters

Title 
Vista Analysis AS 	12	 	
Small hydropower station pilot project is also one of the alternatives for switching from 
solid fuel to new energy. In Puan county (Guizhou p rovince), the annual cost of fuel 
spent by each household is reduced to nearly one hu ndred Yuan after the completion of 
small hydropower station with 3100kw installed capa city. The total investment of the 
project is 17 million Yuan and more than 3000 househ olds will switch from the firewood 
stove to the clean and cheap electricity power with bearing the cost less than 0.2yuan 
per KWh	
7. The annual cost of coal saved per household is es timated more than 800 Yuan 
without mentioning the other benefits from improved environment. It is expected that 
the installed capacity of small hydropower stations will reach to 1mkv in 2020	
8 and a 
large scale of population in rural and remote areas will be benefited. 
 	
 	
 	 	
7 The source of the data: http://power.nengyuan.net/ 2008/0111/1808.html (in Chinese)	 	
8 Energy Development Plan in Guizhou Province was re leased in 2007, webpage: 
http://www.lrn.cn/basicdata/elseplan/200711/t200711 20_169483.htm	 (in Chinese)

Title 
Vista Analysis AS 	13	 	
3 Literature Review 
The long-term exposure to the indoor firewood smoke may cause various severe health 
outcomes; most of previous epidemiology studies sho w that the main diseases referring 
to the solid fuel combustion can be: morbidity and mortality from respiratory disease 
(RD), chronic bronchitis (CB), and cardiovascular d iseases (CVD). But it is difficult to 
monitor the pollution level and quantify the exact health outcomes from certain amount 
of pollutants (G. He, B. Ying, J. Liu, S. Gao, S. S hen, K. Balakrishnan, Y. Jin, F. Liu, N. Tang, 
K. Shi, E. Baris and M. Ezzati, 2005). After obtai ning the evidences from epidemiology 
studies regarding the solid fuels combustion damage , the next step for processing the 
cost-benefit analysis is to estimate the economic v alue of the quantified health hazard. 
The core part involved in this step is the determin ation of the monetary valuation of 
statistical life in China. 
3.1 Concentration of pollutants 
From the 1990s, the researchers began to evaluate t he effects of the national stove 
program launched from 1980s and provided plenty of detailed measurements of both 
traditional stove and the improved stove. However, as indicated in many papers, ‘the 
analysis of improved stoves was complex ’ (R.D. Edwards et al., 2004). The reasons for this 
problem can be diverse. Not only the using of compl ex combination of the fuel affects the 
results of analysis, the seasonal changes of fuel o ption combination also make the 
estimation more ambiguous. It was mentioned as ‘mis classification’, since the standard 
of the improved stove has not been defined clearly yet. According to the data collected 
for the national stove program, the seasonal PM	
4 concentration level for almost all 
households was higher than the national standard	
9 except in the summer, which varied 
from 200µg/m	
3 to over 300µg/m	3. Through the comparison of the performance across 
several stoves using different fuel type, the purpo se is to carefully examine the varied 
pollutant products from the stoves combustion proce ss. There also rise the concerns for 
the global warming attributed to these pollutants(R .D. Edwards, K.R. Smith, J. Zhang and 
Y. Ma, 2004). 
 	
 	
9 The national standard level of PM	10 is 150µ g/m	3. PM	4 concentration of 200-300µ g/m	3 implies that PM	10 
concentrations are at least as high as PM	
4. Since PM	4 denotes particles less than 4 micrometers in diame ter, while 
PM	
10 denotes particles less than 10 micrometers in diam eter.

Title 
Vista Analysis AS 	14	 	
Since the evaluation of the improved stove is such a complex process, some researchers 
plan to disaggregate the exposure level according t o living places and time activity and 
other endogenous factors (S. Dasgupta et al., 2004, H. E. Mestl, K. Aunan, H. M. Seip, S. 
Wang, Y. Zhao and D. Zhang, 2007). From examining th e demographic and indoor air 
pollution data collected from the households in fou r poor provinces in western China, 
included Guizhou province as well, the results demo nstrate that Guizhou province 
obtains the lowest awareness of the health hazard c aused by respirable matters. The 
main reason is most of the traditional or improved stoves are poorly ventilated in the 
rural area of Guizhou province, it is hardly to cal l the stoves are improved. Although 
most of the coal stoves with the chimney, almost 90 % of them are ‘ending in the attic’ in 
order to dry chili or corns with the flue gas, whic h leads to a heavily polluted indoor air 
quality (Y. Jin, X. Ma, X. Chen, Y. Cheng, E. Baris a nd M. Ezzati, 2006). 
3.2 Epidemiology Studies 
The estimation from WHO studies demonstrated that t he use of solid fuel could cause 
great damage to human health and the case can be ev en worse combined with open 
stove; poor ventilated condition or housing conditi on. The experts try to unify the 
systemic analysis of risk factors attributed to cer tain health outcomes; as a result, the 
baseline description for health burden and associat ed risk factor needs to be clarified 
clearly. Based on the primary data of mortality and morbidity together with the previous 
papers studies related to the health hazard and dis ease casualty, the meta-analysis can 
give significant risk factors attribution: ALRI in children less than 5 years, COPD, 
cataracts, tuberculosis, asthma and lung cancer fro m using biomass for cooking or 
heating (M. Ezzati et al., 2002b). The estimated m ain health burden from the use of solid 
fuel includes: lower respiratory infections (more t han one third of the total mortality 
from this disease), chronic pulmonary disease (abou t 22% of the total mortality from 
this disease) and 1.5% of total mortality cases fro m lung cancer, tuberculosis cataracts 
and asthma may be also associated with the indoor a ir pollution (G. H. Brundtland, 
2002). 
WHO introduces the attribution fractions to explain the relative risk of the population 
exposed associated with indoor pollutants concentra tion; therefore the excess health 
burden for counterfactual scenario can be calculate d compared with the guideline

Title 
Vista Analysis AS 	15	 	
pollutants exposure level. According to WHO air quality guidelines	10, it is clear that the 
concentration of PM	
10 or PM	2.5	 for the household using traditional stove is usual ly 10 
times more than the guideline level, which will pos e greater health risk for the people 
living in this air quality. (M Desai, S Mehta and S mith K., 2004, A. Rodgers et al., 2004, 
WHO, 2000). 
A study in Taiyuan, where the major energy consumpt ion is coal, gives the evidence for 
the linkage between the morbidity of respiratory di seases (RD) and the exposure from 
the combustion of solid fuel. The estimation from m ultivariate logistic regression 
analysis shows that the odds rate	
11 of respiratory symptoms associated with one 
additional unit of PM10 and PM2.5 logarithm increas ement are 1.67 and 1.79 
respectively. After changing to COPD as dependent v ariable in the multivariate Logistic 
regression model, relative risk of being afflicted with COPD associated with one 
additional unit of PM10 and PM2.5 logarithm increas ement are 1.51 and 1.68 
respectively. The three scenarios in this study are divided according to the different 
levels of concentration exposure. Consistent with m ost previous reports from abroad 
studies, the area with highest exposure level obtai ns the highest relative risk of COPD 
and RD (Y. Jin et al., 2001). 
Some papers also focus on analyzing the health burd en caused from mainly ‘poisonous’ 
coal in remote rural area in China. By reviewing of the main data resources about the 
exposure data comes from the paper relating to the three stove programs conducted in 
China: the national stove program, World Bank proje ct and Sino-Dutch project, the 
results of meta-analysis support the results from W HO research and relating 
epidemiologic studies. The excess health burden inc ludes: lung cancer, respiratory 
illnesses, acute respiratory infection and COPD. On e recommended intervention is to use 
the less poisonous fuel such as washed coal (J. J. Zhang and K. R. Smith, 2007). 
The economists are interested in monetizing the val ue of the interventions for 
mitigating the indoor air pollution and the energy shortage. The mainly used method is 
the cost-benefit analysis. The comparison between i mplementing stove program and 
 	
 	
10 Annual mean concentration level of PM	2.5 is 10µ g/m	3, PM	10 is 20µ g/m	3 	11 Odds rate is used to assess the risk of particular outcome associated with certain level of exposure 
concentration or other influence factors taking pla ce.

Title 
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biomass power plant indicates that the stove program has greater potential of 
increasing the income of local residents and the CO 2 emission reduction. The benefits 
from generated social welfare will cover the cost o f the stove program. Thus the stove 
program is recommended for the rural and remote com munity with possible financial 
support and backup stove technology (L. Gan and J. Yu, 2008). A cost-benefit analysis 
conducted for assessing potential measurement indic ates that implementing theses 
interventions in Shanxi province for mitigating the PM	
10 exposure and other polluting 
emissions will generate large profits in a socio-ec onomic sense with only including the 
benefits from the CO	
2 abatement (K. Aunan et al., 2004). 
 	
4 Methodology 
In this section we will introduce the cost-benefit analysis model. I use this model to 
assess the cost and benefits of implementing a new stove dissemination program in 
rural Guizhou. This method is adopted in order to m ake suggestions and 
recommendations for the policy makers or stakeholde rs. The implementation of the 
stove program is considered advisable, if and only if 
B>C

Title 
Vista Analysis AS 	17	 	
In this cost-benefit analysis, we use B to stand for gains or benefits through new biomass 
stove project; C represents the total cost for impl ementing this project. As conducting a 
cost-benefit analysis, we calculate the benefits ge nerated from the project based on the 
purpose of the project that we are particularly int erested. Since the main purpose that 
we promote the new stove project is to mitigate the indoor air pollution and reduce the 
mortality risks of residents in rural Guizhou, ther efore the major direct benefits we 
concerning from the stove project is the health imp rovement. The net benefits of the 
project could be scaled up if the intervention coul d potentially be introduced to a 
population of household P for instance rural area i n Guizhou, the total benefit to society 
is 
(B-C)*P 
A benchmark scenario will be established in the cas es of the emission level of old stove. 
Since the stove company introduces a new technology or innovation, the pollutant 
concentration of using the new stove can be reduced to a lower level compared to the 
old stove, this reduction will lead to a correspond ing reduction in the mortality rate for 
the certain risk factors. Many of previous epidemio logical studies provide reliable 
theoretical basis for quantify the health improveme nt related to certain pollutant 
concentration reduction. The commonly used method i s using the dose-response 
relation to determine the mortality and morbidity r isks associated with exposure to PM, 
CO or other pollutant (C Arden Pope III et al., 200 9, L. Zhong et al., 1999). Although many 
studies have shown that the higher the concentratio n of pollutants will lead to more 
serious health damage, when it comes to the specifi c quantitative results, there is still 
certain existence of uncertainty. 
4.1 The calculation of benefits, B 
4.1.1 Conceptual Model 
In a stove intervention, the starting point is a ne w stove that hopefully has a lower 
emission factor than the previous stove, and at lea st it ventilates emissions better. The 
next step is to determine how indoor air quality is affected. Therefore it needs to be 
determined firstly how household exposure is affect ed. Then we need to transfer the 
affected exposure to the associated health outcomes . Finally the changes in health 
outcome are valued. If we consider the stove will b e disseminated using household as a

Title 
Vista Analysis AS 	18	 	
unit, the benefit can be calculated for the representative household. Thus in this 
conceptual model, the indoor air quality IAP is ass umed as a function of concentration 
level e	
1…	eN for all household stoves, 
IAP= IAP (e
1..e	i..e	N) i=1, ... , N (1) 
e	
i is defined as the concentration of the traditional stove for specific household stove i. 
After the intervention, if all households have been equipped with new stoves, the IAP is 
IAP = IAP (e	
0 1..e	i1..e	N 1) i = 1, … , N 
 (2) 
We expect that after the intervention, the combusti on and thermal efficiency of the new 
stove i will be improved and the concentration level for t he new stove will be down to 
e	
i 1. Then intake fractions IF is introduced to mapping
 between exposure and indoor air 
quality 
IF= IF (IAP) (3) 
The IF function should be different for each catego ry of family members, i.e. the three 
types of the health impact will be calculated: wome n, men and children, the effects could 
change if the females bear most of the cooking work . 
In some papers, the different health conditions are described as a univariate scale of 
‘ health state ’. From introducing this health-state index, it all ows researchers to assign 
flexible values to the specific health effects (Wil liam H. Desvousges, F. Reed Johnson and 
H. Spencer Banzhaf, 1998). Health status H is a fu nction of IF but also on factors like 
smoking s. Smoking can be considered as a behaviora l trait which is exogenous to the 
stove program. When we calculate the possible healt h improvement from the stove 
program, we should separate the exogenous smoking e ffect from the total health 
burden. 
H = H (IF; s) dH= H’dIF (4) 
Finally we will value health status and the theoret ically consistent way of doing that is 
through the utility function. The utility gain from the stove project can be interpreted as 
the value of the declining risk factors for the cle aner air quality.

Title 
Vista Analysis AS 	19	 	
U = U (H) (5) 
Combing the equations (1) – (4), the full conceptua l model to calculate the net benefit is 
suggested as below, 
B = U	
1 – U	0 (6) 
For small interventions B approximates to 
B = U’ dH = U’ H’ IF’ dIAP (7) 
U’ equals willingness to pay (WTP), H’ is improveme nt in health status with respect to 
the specific exposure reduction, IF’ is changes in exposure. The determination of dIAP 
depends on the emission reduction. 
dIAP = IAP’ de (8) 
 	
4.1.2 Practical Computing Model- Pollutant-based me thod 
Transformation from conceptual model to the practical computing model needs more 
information to establish the mapping of exposure an d excess mortality risks. The studies 
of epidemiology provide the basis of calculation, t he commonly used methods include 
fuel-based and pollutant-based (M Desai, S Mehta an d Smith K., 2004, H. E. S. Mestl, K. 
Aunan and H. M. Seip, 2007). Mestl and Edwards (in press) collects the data of the 
emission factors in three provinces in China and th e estimation of the data gives the 
updated version of dose-response function in rural areas of China, we will continue to 
use these equations for both calculation and Monte Carlo simulation. I conduct the 
Monte Carlo simulation in Excel: the first step is to determine the varying range of the 
certain parameters in the model, then Excel can per form random draws on normal 
distribution for simulation, here in the data sheet , 6000 random draws are generated. 
This is fairly not a large sample population, but i t is enough for me to process the 
calculation or statistical analysis based on the di stributions of the draws. To estimate 
the relative risk (RR) for cardiopulmonary and card iovascular diseases, the exposure 
metric which gives significant health outcomes is d etermined as PM2.5, 
 DD = PWE×V (9)

Title 
Vista Analysis AS 	20	 	
DD is the daily dose, which indicates the actual intake level of certain pollutants for a 
person, corresponding to equation (3). PWE is popul ation weighted average PM	
2·5 	
exposure. V is inhalation rate, which is estimated as average 18 m	3 per day for adults (C 
Arden Pope III, Richard T. Burnett, Daniel Krewski , Michael Jerrett, Yuanli Shi, Calle 
Eugenia E. and Thun Michael J., 2009). 
The mapping of RR and DD is represented as a logari thmic relationship for 
cardiopulmonary diseases (CPD) (Heidi ES Mestl a nd Rufus Edwards, In press), given 
as below: 
RR=0.1083*ln (DD) +1.37 R	
2=0·87 (10) 
Relative risk	
12 for CPD includes risk factors of both CVD and pulm onary diseases (COPD 
and ALRI). Since the CVD and COPD are the common di seases among the adults while 
ALRI only exists in the group of children less than 5 years old, therefore we can use 
equation (10) to calculate the excess mortality ris ks for COPD, ALRI and CVD with 
respect to the corresponding daily dose level for e ach sub-population category. When 
processing the computing of the relative risk and e xcess mortality risks, I assume a 
family as a representative household according to t he statistical data (NBS, 2008). The 
excess mortality risk or premature mortality risk f rom the risk factors is estimated from 
the equation below, 
Mp =	
∗∗(

) ∗(

)	 (11) 
Mp is defined as the premature mortality risk for e ach population category while M is 
the total mortality risk subtracted by the part of mortality risk attributed by smoking. 
The population weighted exposure and relative risk are differed across the category of 
family members, the exposure to women and children is assumed to be the same, but for 
men, the risk factors could be lower since men prob ably spent less time in the kitchen 
and be exposed not as heavily as women and childre n. The exposure ratio for men and 
women is estimated between 0.69 and 0.82, I choose to use the exposure ratio as 0.69 in 
the calculation (Heidi ES Mestl and Rufus Edward s, In press). 
 	
 	
12 Relative risk refers to the odds rate mentioned be fore.

Title 
Vista Analysis AS 	21	 	
Based on the model I introduce above, the benefits from the new stove can be valued 
from the less exposure level which will finally lea ds to the reduction of the excess 
mortality risk, in other words, the excess health h azard that can be avoided from the 
intervention. M
G = M	p – M	p1 
 (12) 
M	
G is the gap of excess mortality risk between the ba seline and the intervention 
scenarios. 
As the problem of quantifying the excess mortality risk reduction obtained from the 
stove project is solved, the next step is to moneti ze this health improvement. The 
appropriate way to interpret this improvement is th e WTP for certain changes of risk 
factors. 
WTP = VSL * M	
G 	 (13) 
In this equation, VSL is the value of statistical l ife. According to United States 
Environmental Protection Agency (US EPA), VSL is de fined as the monetary valuation 
placed on the elimination of premature mortality ri sk	
13. Finally the benefits for the 
representative household are available for comparis on with the costs that will be paid. 	
4.2 The calculation of costs, C 
As mentioned before, the costs C represents the total cost of implementing the project. It 
includes: sum of purchase and installation cost, tr ansportation cost and the shared price 
of other supporting facilities, such as the pellets machine or chopping machine which 
can sustainably provide the most suitable fuel for the new stove (Haakon Vennemo, 
2010). 
4.3 Comparison with present value of benefits and c osts	 
 = 	
	
()		 	 
 (14) 
And the formula to calculate present value of net b enefit is 
 	
 	
13 A formal definition of VSL can refer to the webpa ge from USEPA: 
http://www.epa.gov/oaqps001/benmap/basic.html

Title 
Vista Analysis AS 	22	 	
 = 		
()	 	 	− C
 (15) 
Where B	
t and C	t are annual benefits and costs for the intervention respectively, d is the 
discount rate; here we use interest rate subtracted by WTP growth to define the 
discount rate.

Title 
Vista Analysis AS 	23	 	
5 Simulation analysis 
In this section, first of all, I will calibrate parameters related to the model, which 
includes demographic data of rural households to ca pture the characteristics of the 
household in rural Guizhou, relevant manufacture da ta for new biomass stoves and the 
updated indoor air pollution-related data collected in rural Guizhou for the baseline 
scenarios. I will also answer the substantial quest ions involved for calculating the 
benefits, such as the determination of the WTP. The health effect with regarding to the 
different level of indoor air pollution will be exp lained precisely with respect to each 
category of the household. The mortality rate of th e CVD is explained by the 
corresponding relative risk generated by different level of pollutant. Using Monte Carlo 
simulation, the cost-benefit analysis can be conduc ted for alternative interventions 
targeting different levels of pollution. It will be also interesting to test whether the 
changes of the situations may alter the results. In the Monte Carlo simulation, the basis 
for processing the simulation in Excel is the sets of randomly generated numbers within 
a certain interval. All sequences of randomly gener ated numbers follow a uniform 
distribution. 
5.1 Calibration 
I calibrate the model using the data from Guizhou S tatistical Yearbook (NBS, 2008) and 
CICERO. 
Table 5.1 Parameters calibration 
Discount Rate Time 	
Number of 	
family 
members Cost 
Value of 
statistical life 	
0.025	 	8 	4.42	 	400	 	600000	 	
 
The discount rate is an important part for the cost -benefit analysis, if it is set too low, 
some projects which cannot generate adequate social welfare can still pass the cost-
benefit analysis. In contrast, if the discount rate is too high, some feasible projects might 
still not be able to pass the cost-benefit analysis . In the simulation, we use the interest

Title 
Vista Analysis AS 	24	 	
rate subtracted by WTP growth rate to represent the discount rate which is set to be 
around 0.025. 
Some manufacturers guarantee the lifetime of the st ove lasting for 8 years (B. Zhou, 
2009) while others claim either the guarantee of 5 years or 10 years. The variation of 
stove lifetime seems in a certain range. Here I cho ose the median point indicating that 
stove can be used for 8 years. To establish a repre sentative household for rural area in 
Guizhou province, I use the average members in the rural household and the members 
of labor force for adults in each family, and the r atio between female and male to 
construct the each category of family members. And therefore, the numbers of female 
and male are estimated at 1.39 and 1.51 respectivel y. This simplification will bring out 
convenience when we calculate the mortality risks t hat each household faces before and 
after the intervention (NBS, 2008). The retail pri ce of the stove can be varied among a 
large range based on the investigation from the bio mass market in China. The price can 
range from 200 to almost 700 Yuan (See Table 5.2). We select C = 400 in our base case 
simulation as choosing the stoves with median price including other shared cost of 
transportation and pellet machines	
14. In the simulation, an interval for possible cost 
values will be set for sensitivity test. 
Table 5.2 Pricelist of biomass stoves 	
Company	 	Daxu	 	Heluo	 	Liangqi	 	Jin Qilin	 	Guang Lei	 	Sheng Chang	 	
Price (	¥) 	650	 	520	 	400	 	400	 	400	 	200	 	
Source: modified from CAREI 2007 and Zhou 2009 (CAR IE, 2007) 
The next major problem is to determine the value of statistical life (VSL) in rural China. 
This is also an important component of cost-benefit analysis since the valuation of risk is 
through VSL. The commonly used method is contingent valuation but there is 
uncertainty and other endogenous factors which may affect the estimation. From 
reviewing of the papers referring to this subject ( Table 5.3), the estimations using 
contingent valuation or hedonic method have show gr eat variations across the different 
 	
 	
14 The introduction of pellet machine is to provide t he most suitable fuel for the new stove and maximiz e 
the effectiveness of the new stoves.

Title 
Vista Analysis AS 	25	 	
regions or population differing in income levels. Thus we need to be more cautious in 
determining the VSL for the household members in ru ral Guizhou. 
Table 5.3 Summary of the publications used for esti mating VSL in China 	
Reference	 	Valuation 
Method 	
Area	 	VSL(m	illion 
¥) 	
Notes	 	
(J. K. Hammitt 
and Ying Zhou, 
2006) 	
Contingent 
Valuation 	
Rural area	 	0.701	 	mean value	 	
Anqin	 	0.26	 	
Beijing	 	0.45	 	
(X. Deng, 2006	) 	Human Capital 
Approach 	
Beijing	 	0.735	 	The figure finally 
adopted for is 
735000 	
Per Capita of 
GNI conversion 	
Beijing	 	0.72	 	
(H. Wang and J. 
Mullahy, 2006) 	
Contingent 
Valuation 	
Chongqing	 	0.3	-1.25	 	Annual income in 
this region is ¥3430 
per capita 	
(X. Zh	ang, 	
2002) 	
Contingent 
Valuation 	
Beijing	 	0.24	-1.7	 	Estimation from 
lower-bound 
Turnbull 	
(X. Guo, 2006	) 	Contingent 
Valuation 	
Chengdu 
and national	 	
0.14	-0.42	 	Annual income is 
set around 6720 	
(WorldBank, 
2007) 	
Willingness to 
Pay approach 	
Shanghai 	 	1.4	 	Also 1 million is 
used in the 
estimation 	
Chongqing	 	Lower than 
1.4 	
(R. Mead and V. 	Contingent 	national	 	0.675	-2.87	 	With a low b	ound of

Title 
Vista Analysis AS 	26	 	
Brajer, 2006	) 	Valuation	 	287700	 	
(V. Brajer et al., 
2008) 	
Comparison	 	national	 	0.88	 	No age adjustment 	 	
(H. W	ang et al., 	
2008) 	
Contingent 
Valuation 	
national	 	0.18	- 0.51	 	
 	
Risk of 
underestimation 
exists 	
(K. 	Aunan, J. 	
Fang, Haakon 
Vennemo, O. 
Kenneth and 
M.S Hans, 2004)	
 	
Comparison	 	China	 	100*per 
capita GDP 	
 	
Based on the conservative reading of literatures regarding of the VSL in China, it is clear 
that we can hardly adopt a uniform national VSL lev el since people evaluate the 
mortality risks differently based on their regional income level, the living quality or 
other elements. In particular, when we determine th e VSL, ethical issue will be one of 
the main concerns. Take this stove program as an ex ample, the main objective is to 
improve the indoor air quality in the rural area in Guizhou. Thus the VSL should reveal 
the tradeoff that people will make between the mort ality risks and the benefits. If we 
choose to use a VSL that is too high to afford, the program may pass the cost-benefit 
analysis even that it is unadvisable and vice versa . That is why the VSL that suggested 
by US EPA could be much higher than the VSL estimat ed for China which is $4.8 
million(34 million Yuan) (US-EPA, 1997). 
The regression-based estimation approach in Miller (2000) captures the relationship 
between the VSL and per capita income based on the review of previous VSL estimations 
studies and the corresponding soc-economy character istic of studied population, but the 
samples of VSL are mainly from developed countries. The result of the regression 
indicates that VSL is around 120 multiplied by per capita income. When transferring this 
study to developing countries such as China, some a djustment may be required. It is 
recommended as 100 times per capita GDP in Aunan et .al (2004) in the environmental 
cost model to represent VSL in Shaanxi, which is an other province in China. Compared

Title 
Vista Analysis AS 	27	 	
some results of contingent valuation, it seems quite reasonable to adopt this ratio times 
per capita GDP since it is consistent with the resu lts of contingent valuation in table 5.3. 
As the survey of the VSL in Guizhou is not availabl e, I choose to follow ratio which is 
recommended in Aunan et.al (2004) to determine the VSL in Guizhou province. 
It is reported that the net income level of rural r esidents in Guizhou is more than 3000 
Yuan, while the provincial level per capita GDP has reached to 9000 Yuan (NBS, 2009)	
15. 
In From the perspective of ethical concerns, I will choose 0.3 million as the lower bound 
and 0.9 million as the higher bound for the VSL in Guizhou province in the sensitivity 
test. In the calibration, I choose to use the media n level as 0.6 million for the calculation 
since 0.3 million is a fairly low VSL level even fo r Guizhou province. 	
5.2 The epidemiology data 
Figure 5.1 Impact Pathways Analysis. 
 
As shown in the impact pathway analysis, the proces s of quantifying the health risk is 
based on system of different components. This proce ss is set up according to the data 
 	
 	
15 The recently released statistical report from NBS indicates that per capita GDP in Guizhou is 10258 Y uan 
($1502). See webpage: 
http://www.stats.gov.cn/was40/gjtjj_detail.jsp?sear chword=%B9%F3%D6%DD&channelid=6697&record=23	 
(in Chinese)

Title 
Vista Analysis AS 	28	 	
available	16 and mathematical tools or statistical method which can be adopted (P. Bichel 
and R. Friedrich, 2001). The data used in this anal ysis is collected from three sample 
villages in rural Guizhou and the using-fuel are bi ogas, biomass (mainly firewood) and 
coal respectively. Here in this thesis I only targe t the improvement of households using 
biomass. The reason for that is the mortality risk from attribution risk factor is lung 
cancer for the household using coal. The types of b iomass stoves differ across the 
villages. PM
2.5	, the size of particular matters down to 2.5 microm eter in diameter, is used 
as the only indicator of risk to health from indoor combustion of biomass according to 
the suggestion from WHO (WHO, 2006). 
In the baseline scenario, the concentration of PM	
2.5	 is set as 269µg/m	3 of the indoor air 
pollution level using the tradition stoves and 191µ g/m	
3 for women and kids using the 
old improved stoves. The determination of these con centration levels is based on the 
data collected from the project launched by CICERO mentioned in the previous sections. 
It illustrates that the pollutants emission of the old improved stove is less than 
traditional stove. A new biomass stove with lower e mission will bring the improvement 
for the indoor air quality. The setup of the conce ntration level after intervention is 
100µg/m	
3 along with an interval based on the WHO guideline suggestion(WHO, 2005). 
Here we consider that the exposure level for each f amily member varies, and 
furthermore, the corresponding health outcome varie s too. This proposition will be 
adopted throughout the process of quantifying the m ortality risk. Combining equation 
(10) and (11), it gives that the relative risk asso ciated with the concentration 269µg/m	
3 
is 1.54 for women and kids while the relative risk is 1.5 for men. It indicates that risk of 
dying from CVD under such circumstance is 54% highe r than women and kids living in 
clean air environment. This relative risk will lowe r to 1.43 when the corresponding 
PM	
2.5	 concentration reduces to 100µg/m	3. The baseline mortality risk from COPD and 
CVD subtracted by the risk attributable to smoking is approximately 0.57% and 0.63% 
for men and women respectively in rural China (D. G u et al., 2009, Colin Mathers et al., 
2008). It is noticeable that after the removal of t he mortality risk attributable to 
smoking, women still have higher mortality risk fro m COPD and CVD than men. 
Different from the adults, the mortality risk for t he children (mainly under 5 years old) 
 	
 	
16 The data is kindly provided by Mestl H. and Aunan K . from CICERO.

Title 
Vista Analysis AS 	29	 	
is from ALRI, which is the main cause of death for the children. The baseline of mortality 
risk for children from ALRI is set as 0.06%. 
5.3 Health improvement and Net benefits 
To estimate the health outcomes and the monetized v aluation, the method adopted here 
is to run a Monte Carlo simulation in Excel. Since the original concentration level has 
already been collected, we only allow the estimates of the concentration level after 
intervention to vary from 80µg/m	
3 to 120µg/m	3 with a mean of 100µg/m	3. In the 
sensitivity test, we will adopt different values fo r comparison. The results of the 
simulation concentrate mainly on the possible morta lity risk reduction corresponding to 
different stoves. It will be affected by both stove s used before and new replaced stoves 
which distributed by the project. The random-genera ted sample size of the underlying 
concentration level is 6000. Combining the set of e quation (9)-(15) and 6000 draws 
from the generated sample, the Monte Carlo simulati on gives the quantification of the 
health outcome with uncertainty and variability. 
The simulation is classified into two cases: distin guished by the types of stoves that are 
used before the implementation of new biomass stove project. Figure 5.2 and Figure 5.3 
display the results of cost-benefit analysis for th e household using traditional stove and 
old improved stove respectively. The histograms rev eal the potential gain from the stove 
project under each scenario and provide a visually clear distribution of the monetary 
valuation. It is obvious to notice that the net ben efits are positive in both cases, 
indicating the benefits from health improvement bro ught by the project are sufficient to 
offset the cost. Furthermore, the lower excess mort ality risk reduction implies less net 
benefits created. 
From comparison between Figure 5.2 and 5.3, it illu minates that the amount of net 
benefits in two cases is different in terms of the corresponding generated health 
improvement. The variation of the net benefits is w ithin a considerable large range. The 
maximum net benefits for both cases can reach to ov er 800 Yuan and 500 Yuan, 
respectively. Figure 5.3 also exhibits some degree of the volatility compared with the 
well-distributed decline displayed in Figure 5.2. H owever, simultaneous the trend lines 
in both graphs exhibit the downward sloping which i ndicates that logarithmic relation 
between daily dose and the relative risk affects th e distribution of the simulation. The

Title 
Vista Analysis AS 	31	 	
cases per 0.1 million population. The mean of net benefits is almost 570 Yuan for each 
household. Meanwhile, for the second case, switchin g from old improved stove to the 
new biomass stove, there is an apparent reduction o f health improvement from the 
implementation of the project compared with the fir st case. From the statistical analysis 
of excess mortality risk reduction estimated from a ll of 6000 draws together, the 
reduced health burden from CPD is estimated as 15 p er 0.1 million population. 
Accordingly, the net benefits fall to one-third of the first case. But still these results give 
the evidence for the approval of the new stove prog ram in terms of the positive health 
benefit; the main requirement is the performance of the new stove can lower the 
concentration of PM	
2.5	 to approximately around 100µg/m	3. In the sensitivity test, from 
adding the uncertainty into the estimation, we will assess if there exists other 
alternatives. 
Table 5.4 Summary of statistical results 
Two cases 	
Mean of Reduced 	 	
excess mortality risk	 	
Mean of Net Benefits	 	
 per household 	
Mean	 	
Value 	
Standard	 	
Error 	
Mean	 	
Value 	
Standard	 	
Error 	
From tradition stove to new stove	 	0.00022	 	3.96	E-7 	￥564 	1.7 	
From old improved stove to new stove 	 0.00015	 	3.95	E-7 	￥265 	1.7 	
 
5.4 Sensitivity test 
In the previous sector, I set up the simulation usi ng several calibrated parameters. This 
allows us to avoid the consideration of variation a nd uncertainty in the calculation. As 
demonstrated in the Table 5.5 below, all the parame ters in the model are set up along 
with a variation interval expect the baseline epide miology data. When I use these 
parameters with some degree of uncertainty, the res ults of the estimation is displayed as 
in Figure 5.4. The mean of the mortality risk reduc tion is approximately 0.00024 which 
is slightly higher than the estimation result of th e first case and the mean net benefits is

Title 
Vista Analysis AS 
610 Yuan, which is higher than the mean health improvement for two cases. In addition 
to these, one more thing need our attention is that the
will not be positive for sure, the probability of t he positive net benefits is 94.9%. It 
demonstrates that the assumptions made for the para meters will affect the approval of 
the project. 
Table 5.5	
: The setup of Parameters for lik	
Parameter 
Interest rate less WTP growth (d)
Lifetime(t) 
Original Concentration Level (e
Improved Concentration Level (e
VSL (P) (¥) 
Cost (C) (¥) 
Total mortality of women and kids 
Total mortality of Men 
Total mortality per household
 	
0
40
80
120
160
200
240
280
320
360
400	
Frequency	
Figure 5.4: Estimation of net benefits under 	
610 Yuan, which is higher than the mean health impro
vement for two cases. In addition 
to these, one more thing need our attention is that the	 net benef	it from the intervention 	
will not be positive for sure, the probability of t he positive net benefits is 94.9%. It 
demonstrates that the assumptions made for the para meters will affect the approval of 	
: The setup of Parameters for lik	ely impact estimation 
Nominal Min 	
Interest rate less WTP growth (d)	 0.025 0.02 	
8 5 	
Original Concentration Level (e	0) 250 315 	
Improved Concentration Level (e	1) 100 80 600000 300000 
400 200 	
Total mortality of women and kids 	 0.009625 0.008622 	
Total mortality per household	 0.018247 	
Figure 5.4: Estimation of net benefits under 	
uncertainty 	
32	 	
610 Yuan, which is higher than the mean health impro vement for two cases. In addition 	
it from the intervention 	
will not be positive for sure, the probability of the positive net benefits is 94.9%. It 
demonstrates that the assumptions made for the para meters will affect the approval of 	
Max 
0.03 
11 
185 
120 
900000	
 	
600 	
 	
Net Benefits	
Figure 5.4: Estimation of net benefits under

Title 
Vista Analysis AS 	33	 	
After the estimation with the combination of parameters varied in certain range, I will 
examine how the results will be sensitive to the va riation of each parameter. As 
discussed in the previous sector, the health improv ement for the second case is lower 
than the first case; I conclude that the first case dominates the second. Through varying 
the parameters in the simulation, we can examine if there exists the threshold limit 
value for the positive net benefits. The skewness v alue of this distribution is 0.66 
indicating that tail on the right side is longer. T o clarify the impact from each parameter 
in the sensitivity test, we examine each parameter separately in the simulation; the 
result of the threshold value that will lead to the negative net benefits is detailed in 
Table5.6. 
Table 5.6 Sensitivity of estimation results to seve ral parameters. 	
Parameters	 	Likely impact on results	 	
Interest rate subtracted by 
WTP growth (d) 	Higher discount rate will lead to lower net benefit s. If 
the discount rate is increasing to 15%, the 
corresponding net benefits will be negative. 	
Lifetime(t) 	The net benefits are very sensitive for a few alteration 
of this parameter. If the lifetime of the new stove is less 
than 4.5 years, the stove project will not be consi dered 
as a beneficial intervention from the perspective o f 
health improvement. 	
Improved Concentration Level 
(e	
1) 	
The threshold annual concentration level for the	 new 	
biomass stove is recommended at 125µg/m	3. Thus the 
interval of [80,120] which I suggest for the 
implemented stove can be considered as reasonable. 	
VSL (P) (¥) 	VSL is also a significant factor	 affecting	 the net 	
benefits. If the VSL is down to 360000 Yuan, a 
remarkable low value, the net benefits can hardly s tay 
positive.

Title 
Vista Analysis AS 	34	 	
Cost (C) (¥)	 	The estimated net benefits is quite sensitive to the 
varying of the cost, the maximum cost that can be 
afforded is at 650 in terms of the corresponding 
benefits generated. 	
 
6 Conclusions 
6.1 Remarkable conclusions 
This thesis aims at evaluating the health improveme nt from implementing the new 
biomass stove project in rural of Guizhou. The bene fited population is mainly the user of 
traditional and old improved stoves. I analyze the potential health improvement 
generated from the intervention for the users of th ese two stoves. 
A representative household is assumed in the model according to the demographic data 
of Guizhou province. Base on the epidemiologic stud ies, the results from the computing 
model demonstrated that for both cases, there is si gnificant reduction of the excess 
mortality risk from CPD. This health improvement is larger for the traditional stove 
users. From the results of the cost-benefit analysi s, there are positive net benefits for 
both cases which mean the stove project can pass th e cost-benefit analysis. 
Nevertheless, the uncertainty with regard of the co ncentration level after the 
intervention is also included in the calculation. C onsistent with the health improvement, 
users of the traditional stoves will be benefited m ore from this intervention compared 
with the households using old improved stoves. Thes e results support the approval of 
the stove project for mitigating the indoor air pol lution. 
The results of the sensitivity test also demonstrat e that the emphasis should be put on 
the standardization of the stove production. Since both the lifetime expectancy and the 
performance of the new biomass stove have a signifi cant impact on obtaining the 
positive net benefits. It also demonstrates the imp ortance of setting up the criteria of 
new biomass stove and gives the suggestions for sto ve manufacturers to produce the 
suitable stoves for implementing the intervention.

Title 
Vista Analysis AS 	35	 	
6.2 Discussions 
The cost-benefit analysis conducted in this thesis mainly focus on the health 
improvement with regard to the excess morality risk s reduction from CVD, while the 
potential outcome from the intervention can also be the reduced morbidity risks from 
attributable risk factors without mentioning the ex ternal impact from other 
environmental benefits. It is possible that the ben efits I derive in this thesis may be 
underestimated to some extent especially under such fragile geologic environment in 
Guizhou province. 
The baseline scenarios I considered in this model i s mainly focusing on the traditional 
biomass stove, this assumption does not take full a ccount of the different types of stoves 
used all over the rural Guizhou, while the coal sto ve is also the common type of stove 
and the corresponding health hazard is lung cancer. Therefore the third scenario can be 
the case of switching from coal stove to the new bi omass and the net benefits can be also 
discussed following the same process in this thesis .

Title 
Vista Analysis AS 	36	 	
 
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